Gold prices stay steady as optimism about U.S. rate cuts boosts the market

July 16, 2024

Key points

• Spot gold remained at $2,422.12 per ounce, close to its recent high of $2,449.89.
• U.S. gold futures slightly dipped by 0.1% to $2,425.60.

Gold prices have shown resilience, holding their ground at $2,422.12 per ounce as of 0021 GMT. This follows Monday’s peak of $2,449.89 per ounce, the highest level since May 20. In the futures market, U.S. gold dipped by 0.1% to $2,425.60, reflecting a cautious yet optimistic sentiment among traders.

See: Gold prices trading at 2430.84 as seen on the VT Markets app.

Powell signals confidence in inflation control and potential rate cuts

Federal Reserve Chair Jerome Powell’s remarks on Monday suggested growing confidence in the Fed’s ability to rein in inflation. Powell highlighted three U.S. inflation readings from the second quarter, which indicate a return to the Fed’s target rate, raising the prospects of forthcoming interest rate cuts. 

This sentiment has driven investor interest in gold, as lower rates typically reduce the opportunity cost of holding non-yielding assets like bullion.

You might be interested: Gold holds steady as slowing inflation bolsters expectations of Fed rate cuts

Investors monitor U.S. retail sales and Fed speeches for economic insights

Investors are closely watching U.S. retail sales data, due at 1230 GMT, for further clues on the economy’s health and the Fed’s potential actions. Additionally, speeches by Fed governors Christopher Waller and Adriana Kugler, along with other Fed officials, will be scrutinized for any hints of policy changes.

The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported a 0.17% increase in its holdings, rising to 836.53 tons from 835.09 tons on Friday. This increase in holdings indicates sustained investor interest in gold as a safe haven amid economic uncertainties.

Silver and platinum dip, palladium steady amid rising Indian imports

In other precious metals, spot silver fell by 1.4% to $30.59 per ounce. Platinum slipped 0.2% to $993.28, while palladium remained steady at $950.31. India’s platinum imports in the past four weeks surpassed the total for 2023, driven by a loophole that allows bullion dealers to register alloys with around 90% gold as platinum to avoid higher duties.
Also read: Silver as the best-performing commodity of 2024 

Given the current market dynamics and the anticipated economic data releases, gold prices may remain stable or see slight increases. Investors should watch for any shifts in Fed policy signals and economic indicators, which could influence gold’s appeal..

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